expenses
light shirt dark shirt
Creating a PriCing Strategy
Blank DTG-Printable Shirt
$1.50
$2.25
Ink and Pretreatment
$0.50
$2.50
Production Labor
$1.50
$4.00
Packaging
$0.25
$0.25
Additional Labor
$0.50
$0.50
Scrap, Maintenance, and More
$0.75
$0.75
total Cost to Produce
$5.00
$10.25
making, press setup, color changes, etc., and think instead about
ink, pretreatment, labor, and packaging. It's time to start fresh.
Let's break down the costs of producing a light garment
and a dark garment in general terms. These are going to be
round figures since ink cost, print time, maintenance, and
other expenses will vary from one machine to the next, as
well as by job. These figures simply illustrate the factors to
consider when estimating your true cost for DTG printing:
Blank Goods With today's DTG printers, it's important to
get a shirt that is made for inkjet printing. Without the right
blank shirts, prints will simply not look as good, no matter
what you try.
Ink and Pretreatment For light garments, we're assuming
you will not be using a pretreatment. Ultimately, your market
will dictate that need. For most people, just ink on a shirt creates a fantastic, salable garment.
With dark garments, you'll need to pretreat if you're going
to print white ink. Add in a layer of white ink with enough
opacity to be a good underbase, too. (This is the reason the
ink costs for dark shirts are so much higher.)
Production Labor To calculate this, factor in times for setup,
pretreatment, and underbase printing for dark garments, loading and unloading, and curing. Use the hourly rate of a trusted
employee as your base. Take the time to understand how long
these steps really take; don't just guess what you think you
should make per hour. Be careful that you don't price yourself
out of the market or end up making no profit at all.
Packaging Even if you're planning to hand-deliver the finished product to the customer, as a legitimate business, you're
going to put the finished goods in some sort of a package. Remember the idea of perceived value; it starts with presentation.
Additional Labor Consider the time it takes for an employee to take an order, as well as the time it takes to package and handle the job before delivery.
Scrap, Maintenance, and More Whether you like it or not,
some shirts you print simply won't make the cut. If an error
occurs in production, there's no fixing it. You must make a
new one. Even the most efficient production facilities should
consider a defect rate of 3 to 5 percent. Also factor in items
like silicone and machine maintenance.
Just like costing, this is an area where I see many screen
printers struggling with DTG because they are trying to fit it
into their current price list. It's important to think differently
about how you price your digital decorating. Ask yourself,
"Where can we gain efficiencies?" (Hint: It's not from printing
the same thing over and over.) With DTG, it's not a "win" to
print a one-colored job with block text and no gradients. Your
efficiencies come from eliminating the initial setup and the
speed at which you can print just one shirt.
To set your pricing, you must figure out what you will
need to make from a profit perspective, as well as making
sure you cover your other costs, like rent, equipment lease
payments, taxes, etc. Several pricing techniques can help you
get to that number. Let's explore two common ways.
The first is the cost-plus-markup method, where you take
your cost to produce and then add a markup percentage that
will satisfy your overhead and profit needs. For easy math,
let's use a profit factor of 0.5, or a 100-percent markup. You
take the $5.00 you spend to print a light-colored shirt and
divide by 0.5. That gives you $10.00. Now plug that markup
into your spreadsheet and you have the selling price for all of
your products. Easy.
The second approach takes more time and research, but
it's a more flexible way to determine your selling price. Start
with a percentage value that is needed to cover your bills and
add it to your cost to produce. Let's say you need 25 percent
to cover your bills, so you come up with $6.25 for light-colored shirts and $12.82 for dark. That's the minimum you can
charge for each shirt.
Then, do some research and determine what your target
market will pay for a similar product. Maybe your target is
bands and music enthusiasts. You'll probably focus your efforts
on dark garments. Let's say you find that $15.00 seems to be the
going price for these shirts. Or, assume your target audience is
the high-end car market. Perhaps you find that those consumers are willing to pay $40.00 for a dark garment with an actual
picture of their car on it. Why charge $12.82 when you can
charge $40.00?
With this market pricing model, the key is to set your price
and continue to track the trends. Are shirts selling faster than
you can print them? Move the price up a bit. Are you struggling to get new customers? Maybe a sale for new customers
is in order. This method is much more flexible and allows you
to maximize your profits. With the markup method, you won't
always make as much as you could on some items, while
you'll be priced right out of the market on others.
I truly believe that DTG will revolutionize garment decorating, and if we approach it in the right way, we can maximize
our profits while raising the perception of the common garment
printer. Remember, it's all about that word - perception - so
before you turn on that new machine, be sure you're ready to
present what it has to offer in the smartest way.
april/may 2017
21

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